Heard about “3PL”s but not sure what it is, or who to use? In this post, I’ll define in layman’s terms what a 3PL is. And then speak about the 3PL companies in the US that I’ve worked with and review them. I’ll also give you the recommendation of the best 3PL company that you should work with if you’re in the US so you can prevent immense headaches and save money.

What’s A 3PL, Anyway?

A 3PL stands for “3rd Party Logistics”. The name doesn’t matter though. What matters is what the hell does a 3PL even do?

3PL just refers to a certain way of fulfilling your customer’s orders.

For example, dropshipping describes when you forward the customer’s orders to another seller, and the seller ships it directly to your customer. This way, you don’t have to hold any inventory, but you’ll have a very shaky business model.

3PL, on the other hand, just means you paid a company to store your goods and to ship it to your customers for you. So a 3PL supply chain might look something like this:

1. You buy your goods in bulk from China / Alibaba (as usual).
2. You ship it to your 3PL warehouse.
3. The 3PL company scans / weighs your goods and shoves ‘em on their shelves.
4. A customer goes to your store and places an order.
5. You tell your 3PL warehouse to ship the thing to your customer.

You’ll have inventory risk here, but unlike dropshipping your customers won’t have to wait 3 weeks for an item.

That’s it.

When I was doing research on “what’s a 3PL?” on Google I could hardly find a layman’s answer. Hopefully the above explanation is crystal clear. If not, shoot me an email at hello@goodmoneygoodlife.com and let me know if there’s anything confusing here. I want to make it very easy to understand for anyone trying to use a 3PL service and getting away from dropshipping.

3PL Companies in the US

If you’re reading this – chances are your customers are in the US. Because us Americans like spending money without being able to afford it.

If that’s the case, it serves you purpose if your 3PL warehouses are located outside of the US.

You want your warehouses to be in the US so it’s always domestic shipping and your customers can enjoy a fast shipping experience.

Below are some 3PL companies I’ve worked with in the US and what I think about them.

Context: We ship bigger items. So when I say something is ‘expensive’ or we didn’t ‘go forward with them’ – do your own due diligence. If your ship smaller items, you might be able to get a good deal from the company.

Mint Fulfill

This is the cheapest 3PL I’ve worked with. Very low rates. No onboarding fee. Also, unlike pretty much all examples below, the costs for Mint Fulfill is transparent so I’m not surprised about the invoice each month. Initially, we recommended them because Charlie Brandt from my favorite e-commerce course recommended them.

I would avoid these guys though. They’re super unreliable.

When we worked with them, they lost a shit ton of our stock. And they’d take 2 weeks to reply to urgent messages. We’d call them to follow up on thousands of dollars of lost goods and they’d blame us for it (somehow).

The owner is great and easy to deal with, but there’s another bitch at the company that’s got a lot of attitude and is just terrible customer service.

We eventually got our money back from all the vanished stock, but the whole experience was a nightmare because they never accounted for the stock nor did they tell us at receiving that some stock isn’t accounted for. We only found out we lost a bunch of stock when we ‘ran out’ of inventory too early, causing a supply crunch. There’s nothing worse in e-commerce than not being able to move product, as repeated many times in 12 months to $1 million.

Red Stag

They have very high requirements so it’s quite hard to even get a quote. I’d avoid wasting time even talking to them if you don’t have more than 150+ shipments/month.

Not beginner friendly.

And once I got their quote, they were extremely overpriced compared to almost all other choices.

I don’t care how good service is, I’m not going to pay a huge premium and risk my business so I get slightly better service from a 3PL. If you’re 3PL worth considering, you must meet a threshold of customer service (which Mint fails) anyway.

ShipBob

Their quotes came in one of the cheapest, but we didn’t go forward with them. As you’ll see below, initial estimates mean almost nothing from these 3PLs. It’s quite unlikely the quotes they gave me weren’t lies.

Something didn’t feel right with them, and they were very salesy. It’s not necessarily a bad thing to be salesy, but they have extraordinarily bad reviews on Google so I avoided ‘em.

Verde Fulfillment

Not the most expensive, nor is it the cheapest. However, their customer service is quite good and they’re always able to respond to my requests quite quickly.

Their onboarding was great, and they walk you through everything you need to work with them.

Things got worse after onboarding though because you’re onboarded with their sales guy, who is extremely professional. Once you’re done ‘onboarding’ they give you to someone else, who can be somewhat inexperienced.

Nowadays, when I ask about the status of any package, I don’t really get any useful responses in return. It’s just “I’m understaffed and very stressed out – we’ll get to your order ASAP.”

Well, as a business owner with fucking paying customers, “ASAP” isn’t good enough an answer. I need a fucking date so I can tell my customers when to expect the product that they paid good money for to buy.

TL;DR the experience gets a lot worse after onboarding. Don’t get me wrong though, their service still passes the service threshold for me and is still 1000X better than Shit Mint Fulfill.

Another downside in addition to vague and unhelpful responses is they only have 1 warehouse. In Idaho. You’ll pay basically max costs to ship to the east coast. And surprise surprise, a ton of your customers will be from the East Coast because people who can live on coasts are the ones with disposal income.

Finally, they’re not transparent about costs at all. At least 3 instances, they gave me estimates that were completely wrong, by a factor of 2-3. If you work with these guys, be prepared to be surprised EVERY. SINGLE. MONTH. what the invoice / costs end up at.

I’m OK with the other downsides, but lack of transparency means we’ll soon stop working with these guys. I want to run a reliable business, not a gambling den. I need to know what my expenses are at the end of each month ahead of time so I can make informed decisions. Knowing how much I owe on the day of is like pushing a button that’ll charge a random amount of money each month.

Makes no sense.

Avoid at all costs.

JD.com

They’re a huge Chinese company. And their pitch is they’ve got a huge market cap and know what they’re doing.

My experience is they’re not that good.

Their customer service is OK, and I’d say better than Verde. But below are some downsides.

They would also lose packages, and you eat the cost of lost packages. This is huge because even though they’re the ones shipping your product to the customer, you eat the cost if it doesn’t arrive. This is an unfair amount of burden to place on your customers because why should you, the business owner, pay for some other company’s mistakes?

Below’s an example:

To their credit, they did give me a $100 credit for the lost package. But why do I need to push for it?

In addition, their accounting department sucks. I’ve ACH’d them money, with evidence of money leaving my account. But they’d keep asking me if I had sent the money yet, each month. This is quite annoying because you’re basically replying to the same question every month and it gets annoying. They also keep coming to me with the attitude I owe them money, despite the fact I’ve ACH’d into their account.

Lastly, they also have the ‘not transparent about cost upfront’. They gave me estimates that are wildly incorrect, like Verde (so I’m starting to suspect estimates are just fugazi). And once again, you’ll be surprised every month.

The Best 3PL Of All 3PL Companies In The US

Not sure if you’ve heard of this company, but they’re called Amazon.

At first, I was super reluctant to use them due to 2 things:

• Don’t I have to sell on Amazon to use their warehouses (selling on their platform incurs a lot of extra fees)?
• Won’t customers receive an “Amazon” branded box? That’ll dilute our brand and the customers will price-compare against other alternatives on Amazon!

Let me bust both those myths here.

FBA (or Fulfillment By Amazon) is a service where Amazon ships your products out for you. It’s generally used in conjunction with selling stuff on Amazon. The problem is that Amazon takes a huge commission when you sell stuff on Amazon, but not much of a commission when they fulfill orders for you.

Below are some pain points using FBA, but none of them are deal breakers for me:

• Sign-up process is difficult
• Their UI really sucks and is confusing

That’s it. But once you know how to use the platform, you’re good. Now let me run through why FBA is the only service you should use.

They’re a lot cheaper than other 3PLs. Probably because they’re cash-rich and every single last thing is super optimized in their supply chain. To date, per order, their costs are less than half per package shipped than Verde. For us, FBA increases our margins by about 80%.

They’re an actual expert at their field. And Amazon, even as a consumer for 10+ years, is much more reliable than other shipping services I’ve used.

Another thing, which is HUGE: they’re transparent about costs. When they say a package costs $15 to ship, it costs $15. Not $30. Not $40. Not the same story with Verde and other 3PLs. Just this alone means you should just use FBA and not consider any other 3PL services. This is enormous, because you can now actually calculate your expected expenses and make critical businesses based on that (i.e. how to price your goods, what to charge for shipping, what to tell your customers, etc).

Oh, and another thing: they tell you the worst-case arrival date. No other 3PL will tell you this. 3PLs just say “as soon as possible” or “we’ll ship it out today”.

That’s great — I don’t give a shit about all that. What do I tell my customers about when they’ll get their product? As a business, we don’t get ‘effort points’ for telling our customers that we’ll ship the product out today.

“Oh, the package never arrived but you shipped it? Great! I won’t ask for a refund then.” Yeah, not in this world.

They paid for the product and only care about the result: when do they get their freakin’ product?!

FBA tells you your worst-case arrival date so you can just turn to your customer and say “yep, it’ll arrive at the latest by <xyz> date” with confidence. With 3PLs, you can only guesstimate when a product will arrive. Which, again, introduces more volatility and vulnerability to your business.

OK so that’s all the benefits I can think off of the top of my head. Let’s bust the above 2 myths.

No, you don’t have to sell on Amazon to use FBA. Just sign up for a seller account as you would if you were trying to sell on Amazon. Then, on your ‘start listing’ date, choose a time in the far future. For example:

This way, the product will never ‘sell’ on Amazon and you won’t have to eat expensive seller fees. But you’ll still get to take advantage of their backend FBA services. They call this service MCF, which stands for multi-channel fulfillment. You can just connect with your Shopify store to automate the entire fulfillment process.

For the second myth: you can have the option of shipping only with blank boxes, instead of Amazon-branded boxes. For example:

But as you can see, the tradeoff here is that they might not fulfill it for a while. I would say: just ship it in Amazon boxes. Your customers:

1. Don’t care about the boxes at all. Rather,
2. They care about arrival time a lot, which Amazon definitely delivers on. Pun intended.
3. Care about the product packaging / inserts, not how ‘blank’ or how ‘pretty’ the cardboard shipping box looks like. As long as the product inside is packaged sexily, your customers’ll be happy.

If you do decide to ignore my warnings and/or if you’re not shipping an item as big as us in which case you might try some 3PLs whose estimates might be correct, you should always price compare against FBA’s price charts.

At the end of the day, FBA is a lot more transparent and automated, and 3PLs will always take up more of your time to know 1) what will things cost, and 2) when will a package arrive to your customers?

Notice I mentioned nothing about customer service for FBA because everything’s automated. I don’t need customer service because the dashboard is my customer service.

In sum, always use FBA because:

1. They’re just better at logistics and all your costs/arrival time are transparent.
2. Amazon will likely be cheaper than any FBA because they’re not paying UPS’s salary. They’re big enough to have their own delivery service and they can easily undercut Fedex/UPS/USPS for delivery.

Wrapping Up

A 3PL is just a company/service that’s willing to store your products and ship your products to your customers. You’ll take inventory risk, but you’ll drastically improve customer satisfaction due to much faster arrival times. And at the end of the day, 3PLs might cost more money upfront due to inventory, but might cost a lot less down the road when you have fewer order cancellations / refunds / chargebacks.

As for which 3PL company you should use, just go ahead and use Fulfillment By Amazon. Sign up for a seller account as if you were going to be a seller. And then when you list your product, just make the start selling date somewhere way far off in the future.

What about you?

Do you have any experience with 3PLs or have recommendations? I’d love to know so I can improve my e commerce game. Comment down below or shoot me an email at hello@goodmoneygoodlife.com